Delaware | 0-27275 | 04-3432319 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
99.1 | Press Release dated April 26, 2016 |
Dated: | April 26, 2016 | AKAMAI TECHNOLOGIES, INC. | |
/s/ James Benson | |||
James Benson | |||
Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press Release dated April 26, 2016 |
Contacts: | ||
Jeff Young | Tom Barth | |
Media Relations | Investor Relations | |
Akamai Technologies | Akamai Technologies | |
617-444-3913 | 617-274-7130 | |
jyoung@akamai.com | tbarth@akamai.com |
• | Revenue of $568 million, up 8% year-over-year and up 9% when adjusted for foreign exchange* |
• | GAAP EPS of $0.42 per diluted share, down 2% year-over-year |
• | Non-GAAP EPS of $0.66 per diluted share, up 8% year-over-year |
• | Performance and Security Solutions revenue was $316 million, up 16% year-over-year and up 17% when adjusted for foreign exchange* |
• | Cloud Security Solutions revenue, a component of Performance and Security, was $81 million, up 46% year-over-year and up 47% when adjusted for foreign exchange* |
• | Media Delivery Solutions revenue was $206 million, down 4% year-over-year and down 4% when adjusted for foreign exchange* |
• | Services and Support Solutions revenue was $46 million, up 16% year-over-year and up 16% when adjusted for foreign exchange* |
• | U.S. revenue was $397 million, up 2% year-over-year |
• | International revenue was $170 million, up 24% year-over-year and up 27% when adjusted for foreign exchange* |
• | Media Division revenue was $292 million, down 1% year-over-year and consistent year-over-year when adjusted for foreign exchange* |
• | Web Division revenue was $264 million, up 18% year-over-year and up 18% when adjusted for foreign exchange* |
• | Enterprise and Carrier Division revenue was $12 million, up 45% year-over-year and up 44% when adjusted for foreign exchange* |
• | Cash from operations was $190 million, or 34% of revenue |
• | Cash, cash equivalents and marketable securities as of March 31, 2016 was $1.5 billion |
• | The Company spent $109 million to repurchase 2.2 million shares of its common stock at an average price of $48.97 per share |
• | The Company had approximately 176 million shares of common stock outstanding as of March 31, 2016 |
* | See Use of Non-GAAP Financial Measures below for definitions |
** | Revenue by solution category – A product-focused reporting view that reflects revenue by solution purchased. |
*** | Customer revenue by division – A customer-focused reporting view that reflects revenue from customers that are managed by the division. Historical division revenue can be found on the Investor Relations section of Akamai.com. |
(in thousands) | March 31, 2016 | December 31, 2015 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 312,912 | $ | 289,473 | |||
Marketable securities | 524,958 | 460,088 | |||||
Accounts receivable, net | 365,103 | 380,399 | |||||
Prepaid expenses and other current assets | 127,855 | 123,228 | |||||
Total current assets | 1,330,828 | 1,253,188 | |||||
Property and equipment, net | 770,197 | 753,180 | |||||
Marketable securities | 685,362 | 774,674 | |||||
Goodwill | 1,152,376 | 1,150,244 | |||||
Acquired intangible assets, net | 149,379 | 156,095 | |||||
Deferred income tax assets | 3,490 | 4,700 | |||||
Other assets | 92,120 | 89,603 | |||||
Total assets | $ | 4,183,752 | $ | 4,181,684 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 63,822 | $ | 61,982 | |||
Accrued expenses | 197,487 | 216,166 | |||||
Deferred revenue | 64,905 | 54,154 | |||||
Other current liabilities | 7,019 | 138 | |||||
Total current liabilities | 333,233 | 332,440 | |||||
Deferred revenue | 4,238 | 4,163 | |||||
Deferred income tax liabilities | 11,706 | 12,888 | |||||
Convertible senior notes | 623,485 | 618,047 | |||||
Other liabilities | 97,508 | 93,268 | |||||
Total liabilities | 1,070,170 | 1,060,806 | |||||
Total stockholders' equity | 3,113,582 | 3,120,878 | |||||
Total liabilities and stockholders' equity | $ | 4,183,752 | $ | 4,181,684 |
Three Months Ended | |||||||||||
(in thousands, except per share data) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Revenue | $ | 567,725 | $ | 579,159 | $ | 526,536 | |||||
Costs and operating expenses: | |||||||||||
Cost of revenue (1) (2) | 194,736 | 193,212 | 169,294 | ||||||||
Research and development (1) | 40,842 | 37,674 | 35,828 | ||||||||
Sales and marketing (1) | 102,211 | 118,582 | 103,479 | ||||||||
General and administrative (1) (2) | 102,283 | 99,978 | 89,592 | ||||||||
Amortization of acquired intangible assets | 6,716 | 6,783 | 6,780 | ||||||||
Restructuring charges | 6,818 | 250 | 42 | ||||||||
Total costs and operating expenses | 453,606 | 456,479 | 405,015 | ||||||||
Income from operations | 114,119 | 122,680 | 121,521 | ||||||||
Interest income | 3,320 | 2,935 | 3,001 | ||||||||
Interest expense | (4,653 | ) | (4,641 | ) | (4,576 | ) | |||||
Other expense, net | (189 | ) | (499 | ) | (301 | ) | |||||
Income before provision for income taxes | 112,597 | 120,475 | 119,645 | ||||||||
Provision for income taxes | 37,739 | 32,055 | 41,899 | ||||||||
Net income | $ | 74,858 | $ | 88,420 | $ | 77,746 | |||||
Net income per share: | |||||||||||
Basic | $ | 0.42 | $ | 0.50 | $ | 0.44 | |||||
Diluted | $ | 0.42 | $ | 0.49 | $ | 0.43 | |||||
Shares used in per share calculations: | |||||||||||
Basic | 176,403 | 177,788 | 178,545 | ||||||||
Diluted | 177,539 | 179,732 | 180,825 |
Three Months Ended | |||||||||||
(in thousands) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 74,858 | $ | 88,420 | $ | 77,746 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 80,669 | 80,329 | 70,460 | ||||||||
Stock-based compensation | 31,741 | 33,711 | 29,669 | ||||||||
Excess tax benefits from stock-based compensation | (1,135 | ) | (4,450 | ) | (13,128 | ) | |||||
Provision for deferred income taxes | 1,072 | 22,039 | 8,305 | ||||||||
Amortization of debt discount and issuance costs | 4,653 | 4,641 | 4,576 | ||||||||
Other non-cash reconciling items, net | 2,752 | 2,533 | 443 | ||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||
Accounts receivable | 15,906 | (15,540 | ) | (32,552 | ) | ||||||
Prepaid expenses and other current assets | (3,481 | ) | (8,982 | ) | (1,817 | ) | |||||
Accounts payable and accrued expenses | (32,377 | ) | 25,526 | (52,703 | ) | ||||||
Deferred revenue | 10,653 | (3,684 | ) | 6,947 | |||||||
Other current liabilities | 6,876 | (491 | ) | 42 | |||||||
Other non-current assets and liabilities | (1,949 | ) | (6,261 | ) | 1,741 | ||||||
Net cash provided by operating activities | 190,238 | 217,791 | 99,729 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash paid for acquired businesses, net of cash acquired | — | (18,702 | ) | (16,062 | ) | ||||||
Purchases of property and equipment and capitalization of internal-use software development costs | (82,340 | ) | (78,837 | ) | (137,069 | ) | |||||
Purchases of short- and long-term marketable securities | (95,843 | ) | (108,690 | ) | (97,304 | ) | |||||
Proceeds from sales and maturities of short- and long-term marketable securities | 125,109 | 118,814 | 307,655 | ||||||||
Other non-current assets and liabilities | (2,354 | ) | 543 | (82 | ) | ||||||
Net cash (used in) provided by investing activities | (55,428 | ) | (86,872 | ) | 57,138 | ||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of common stock under stock plans | 18,350 | 7,503 | 24,440 | ||||||||
Excess tax benefits from stock-based compensation | 1,135 | 4,450 | 13,128 | ||||||||
Employee taxes paid related to net share settlement of stock-based awards | (26,496 | ) | (6,993 | ) | (31,101 | ) | |||||
Repurchases of common stock | (108,725 | ) | (100,180 | ) | (62,680 | ) | |||||
Net cash used in financing activities | (115,736 | ) | (95,220 | ) | (56,213 | ) | |||||
Effects of exchange rate changes on cash and cash equivalents | 4,365 | (2,697 | ) | (6,747 | ) | ||||||
Net increase in cash and cash equivalents | 23,439 | 33,002 | 93,907 | ||||||||
Cash and cash equivalents at beginning of period | 289,473 | 256,471 | 238,650 | ||||||||
Cash and cash equivalents at end of period | $ | 312,912 | $ | 289,473 | $ | 332,557 |
Three Months Ended | |||||||||||
(in thousands, except per share data) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Income from operations | $ | 114,119 | $ | 122,680 | $ | 121,521 | |||||
GAAP operating margin | 20 | % | 21 | % | 23 | % | |||||
Amortization of acquired intangible assets | 6,716 | 6,783 | 6,780 | ||||||||
Stock-based compensation | 31,741 | 33,711 | 29,669 | ||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 3,608 | 3,722 | 3,108 | ||||||||
Other operating expenses(1) | 7,528 | 1,067 | 1,709 | ||||||||
Operating adjustments | 49,593 | 45,283 | 41,266 | ||||||||
Non-GAAP income from operations | $ | 163,712 | $ | 167,963 | $ | 162,787 | |||||
Non-GAAP operating margin | 29 | % | 29 | % | 31 | % | |||||
Net income | $ | 74,858 | $ | 88,420 | $ | 77,746 | |||||
Operating adjustments (from above) | 49,593 | 45,283 | 41,266 | ||||||||
Amortization of debt discount and issuance costs | 4,653 | 4,641 | 4,576 | ||||||||
Loss on investments | — | — | 25 | ||||||||
Income tax-effect of above non-GAAP adjustments and certain discrete tax items | (11,323 | ) | (9,631 | ) | (12,437 | ) | |||||
Non-GAAP net income | 117,781 | 128,713 | 111,176 | ||||||||
Depreciation and amortization | 70,345 | 69,824 | 60,572 | ||||||||
Interest income | (3,320 | ) | (2,935 | ) | (3,001 | ) | |||||
Other expense, net | 189 | 499 | 276 | ||||||||
Provision for GAAP income taxes | 37,739 | 32,055 | 41,899 | ||||||||
Income tax-effect of above non-GAAP adjustments and certain discrete tax items | 11,323 | 9,631 | 12,437 | ||||||||
Adjusted EBITDA | $ | 234,057 | $ | 237,787 | $ | 223,359 | |||||
Adjusted EBITDA margin | 41 | % | 41 | % | 42 | % | |||||
Non-GAAP net income per share: | |||||||||||
Basic | $ | 0.67 | $ | 0.72 | $ | 0.62 | |||||
Diluted | $ | 0.66 | $ | 0.72 | $ | 0.61 | |||||
Shares used in non-GAAP per share calculations: | |||||||||||
Basic | 176,403 | 177,788 | 178,545 | ||||||||
Diluted | 177,539 | 179,732 | 180,825 |
Three Months Ended | |||||||||||
(in thousands) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Revenue by solution category(1): | |||||||||||
Performance and Security Solutions | $ | 315,863 | $ | 314,885 | $ | 271,959 | |||||
Media Delivery Solutions | 205,939 | 218,267 | 214,865 | ||||||||
Services and Support Solutions | 45,923 | 46,007 | 39,712 | ||||||||
Total revenue | $ | 567,725 | $ | 579,159 | $ | 526,536 | |||||
Cloud Security Solutions revenue | $ | 80,660 | $ | 72,537 | $ | 55,183 | |||||
Revenue growth rates year-over-year: | |||||||||||
Performance and Security Solutions | 16 | % | 15 | % | 19 | % | |||||
Media Delivery Solutions | (4 | ) | (3 | ) | 13 | ||||||
Services and Support Solutions | 16 | 18 | 12 | ||||||||
Total revenue | 8 | % | 8 | % | 16 | % | |||||
Cloud Security Solutions revenue growth rates | 46 | % | 46 | % | 83 | % | |||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||
Performance and Security Solutions | 17 | % | 18 | % | 23 | % | |||||
Media Delivery Solutions | (4 | ) | — | 17 | |||||||
Services and Support Solutions | 16 | 21 | 16 | ||||||||
Total revenue | 9 | % | 11 | % | 20 | % | |||||
Cloud Security Solutions revenue growth rates(2) | 47 | % | 50 | % | 88 | % |
Three Months Ended | |||||||||||
(in thousands) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Customer revenue by division(1): | |||||||||||
Media Division | $ | 291,933 | $ | 302,367 | $ | 293,966 | |||||
Web Division | 263,743 | 264,897 | 224,240 | ||||||||
Enterprise and Carrier Division | 12,049 | 11,895 | 8,330 | ||||||||
Total revenue | $ | 567,725 | $ | 579,159 | $ | 526,536 | |||||
Revenue growth rates year-over-year: | |||||||||||
Media Division | (1 | )% | — | % | 14 | % | |||||
Web Division | 18 | 17 | 18 | ||||||||
Enterprise and Carrier Division | 45 | 53 | 32 | ||||||||
Total revenue | 8 | % | 8 | % | 16 | % | |||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||
Media Division | — | % | 2 | % | 18 | % | |||||
Web Division | 18 | 20 | 22 | ||||||||
Enterprise and Carrier Division | 44 | 55 | 33 | ||||||||
Total revenue | 9 | % | 11 | % | 20 | % |
Three Months Ended | |||||||||||
(in thousands) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Revenue by geography: | |||||||||||
U.S. | $ | 397,283 | $ | 415,835 | $ | 388,973 | |||||
International | 170,442 | 163,324 | 137,563 | ||||||||
Total revenue | $ | 567,725 | $ | 579,159 | $ | 526,536 | |||||
Revenue growth rates year-over-year: | |||||||||||
U.S. | 2 | % | 5 | % | 20 | % | |||||
International | 24 | 17 | 7 | ||||||||
Total revenue | 8 | % | 8 | % | 16 | % | |||||
Revenue growth rates year-over-year, adjusted for the impact of foreign exchange rates(2): | |||||||||||
U.S. | 2 | % | 5 | % | 20 | % | |||||
International | 27 | 27 | 21 | ||||||||
Total revenue | 9 | % | 11 | % | 20 | % |
Three Months Ended | |||||||||||
(in thousands, except end of period statistics) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||
Stock-based compensation: | |||||||||||
Cost of revenue | $ | 3,970 | $ | 3,901 | $ | 3,163 | |||||
Research and development | 6,438 | 6,570 | 5,366 | ||||||||
Sales and marketing | 12,352 | 14,247 | 12,983 | ||||||||
General and administrative | 8,981 | 8,993 | 8,157 | ||||||||
Total stock-based compensation | $ | 31,741 | $ | 33,711 | $ | 29,669 | |||||
Depreciation and amortization: | |||||||||||
Network-related depreciation | $ | 55,174 | $ | 54,978 | $ | 48,988 | |||||
Other depreciation and amortization | 15,171 | 14,846 | 11,584 | ||||||||
Depreciation of property and equipment | 70,345 | 69,824 | 60,572 | ||||||||
Capitalized stock-based compensation amortization | 3,257 | 3,414 | 2,952 | ||||||||
Capitalized interest expense amortization | 351 | 308 | 156 | ||||||||
Amortization of acquired intangible assets | 6,716 | 6,783 | 6,780 | ||||||||
Total depreciation and amortization | $ | 80,669 | $ | 80,329 | $ | 70,460 | |||||
Capital expenditures(1)(2): | |||||||||||
Purchases of property and equipment | $ | 50,067 | $ | 58,541 | $ | 89,129 | |||||
Capitalized internal-use software development costs | 35,172 | 30,017 | 33,983 | ||||||||
Capitalized stock-based compensation | 5,203 | 5,199 | 4,144 | ||||||||
Capitalized interest expense | 785 | 791 | 675 | ||||||||
Total capital expenditures | $ | 91,227 | $ | 94,548 | $ | 127,931 | |||||
Net (decrease) increase in cash, cash equivalents and marketable securities | $ | (1,003 | ) | $ | 19,362 | $ | (113,145 | ) | |||
End of period statistics: | |||||||||||
Number of employees | 6,119 | 6,084 | 5,409 | ||||||||
Number of deployed servers | 216,435 | 210,533 | 175,094 |
• | Amortization of acquired intangible assets – Akamai has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions Akamai has made. The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and are unique to each acquisition; therefore, Akamai excludes amortization of acquired intangible assets from its non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results. |
• | Stock-based compensation and amortization of capitalized stock-based compensation – Although stock-based compensation is an important aspect of the compensation paid to Akamai's employees, the grant date fair value varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of Akamai's current financial results to previous and future periods difficult to interpret; therefore, Akamai believes it is useful to exclude stock-based compensation and amortization of capitalized stock-based compensation from its non-GAAP financial measures in order to highlight the performance of Akamai's core business and to be consistent with the way many investors evaluate its performance and compare its operating results to peer companies. |
• | Acquisition-related costs – Acquisition-related costs include transaction fees, due diligence costs and other direct costs associated with strategic activities. In addition, subsequent adjustments to Akamai's initial estimated amounts of contingent consideration and indemnification associated with specific acquisitions are included within acquisition-related costs. These amounts are impacted by the timing and size of the acquisitions. Akamai excludes acquisition-related costs from its non-GAAP financial measures to provide a useful comparison of Akamai's operating results to prior periods and to its peer companies because such amounts vary significantly based on the magnitude of the acquisition transactions. |
• | Restructuring charges – Akamai has incurred restructuring charges that are included in its GAAP financial statements, primarily related to workforce reductions and estimated costs of exiting facility lease commitments. Akamai excludes these items from its non-GAAP financial measures when evaluating its continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating expenses. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of its business. |
• | Amortization of debt discount and issuance costs and amortization of capitalized interest expense – In February 2014, Akamai issued $690 million of convertible senior notes due 2019 with a coupon interest rate of 0%. The imputed interest rate of the convertible senior notes was approximately 3.2%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity under GAAP, thereby reducing the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. All of Akamai's interest expense is comprised of these non-cash components and is excluded from management's assessment of the company's operating performance because management believes the non-cash expense is not indicative of ongoing operating performance. |
• | Loss on investments and legal matters – Akamai has incurred losses from the impairment of certain investments and the settlement of legal matters. In addition, Akamai has incurred costs with respect to its internal investigation relating to sales practices in a country outside the U.S. Akamai believes excluding these amounts from its non-GAAP financial measures is useful to investors as the types of events giving rise to them occur infrequently and are not representative of Akamai's core business operations. |
• | Income tax effect of non-GAAP adjustments and certain discrete tax items – The non-GAAP adjustments described above are reported on a pre-tax basis. The income tax effect of non-GAAP adjustments is the difference between GAAP and non-GAAP income tax expense. Non-GAAP income tax expense is computed on non-GAAP pre-tax income (GAAP pre-tax income adjusted for non-GAAP adjustments) and excludes certain discrete tax items (such as recording or release of valuation allowances), if any. Akamai believes that applying the non-GAAP adjustments and their related income tax effect allows Akamai to highlight income attributable to its core operations. |